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August 2023

U.S. Coast Guard’s Original Equipment Manufacturer License Requirement Declared Unlawful

In a July 31, 2023 opinion, unsealed as of August 21, 2023, the U.S. Court of Federal Claims sustained a bid protest against the U.S. Coast Guard ("USCG") due to a requirement that the awardee hold an Original Equipment Manufacturer (“OEM”) license.[1] The solicitation concerned the overhaul and repair of aircraft propeller components for the HC-144 Maritime Patrol Aircraft, operated by the USCG.

As the name suggests, OEM licenses are primarily a quality assurance mechanism to ensure the servicing of a particular product is in conformity with the specifications of the original manufacturer. OEM licenses are not unique to the USCG and are employed by a number of federal agencies. While not uncommon, agencies must provide justification for the requirement as OEM licenses can be onerous to obtain and restrict competition, especially for small and midsize contractors with fewer resources.

The incumbent contractor in this matter performed identical work for the USCG for five years during the previous contract without an OEM license. The OEM requirement effectively defeated the contractor’s bid despite no change in the solicitation’s scope of work from the previous contract.

In response, the contractor filed a pre-award protest claiming the OEM requirement unduly restricted competition and, therefore, lacked any rational basis (a requirement for agency action). Defending its rational basis, the USCG claimed the OEM requirement would ensure the highest levels of HC-144 performance.

The court agreed with the contractor, finding that the USCG did not have a clear understanding as to the requirements of the particular OEM license and, therefore, could not determine whether the license would satisfy its needs. Accordingly, the court found the USCG requirement was irrational and sustained the protest, ordering the USCG to either remove the OEM license requirement or sufficiently justify the inclusion of the requirement, consistent with the court’s opinion. 

For direction as to how this decision may affect a particular business, please contact Patrick Burns or another member of the Gordon & Rees Government Contracts practice group


[1] Piedmont Propulsion Sys., LLC v. United States, No. 23-330 C, 2023 WL 5341505 (Fed. Cl. July 31, 2023)

Commercial Litigation

Patrick K. Burns

Commercial Litigation
Government Contracts